Active Stocks Bounce Back In 2019

<span style="color: #878686;">After two challenging years, stocks in the active lifestyle space saw a strong recovery in 2019 as the broader stock market delivered its biggest gains since 2013. Among stocks seeing their values spike were Yeti, Hibbett Sports, Lululemon, Skechers, Dick’s Sporting Goods, and Sportsman’s Warehouse.

Of 75 stocks in the industry tracked by the Editors of SGB Executive, 51, or 68 percent, showed gains.

In 2018, slightly more stocks in the active lifestyle space fell than rose as the major U.S. stock indexes suffered declines that ranged from 4 percent to 8 percent due largely to fears of an economic slowdown amid U.S.-China trade tensions. In 2017, the broader markets were up more than 20 percent, but stocks in the active lifestyle space underperformed due in part to the hangover of the liquidation of The Sports Authority and other bankruptcies in the space.

In 2019, however, the Dow Jones Industrial Average was up 22.3 percent, its best year since 2017, while the S&P 500 saw its best year since 2013, gaining 28.9 percent. The gains were traced to President Trump’s tax cuts, share buybacks and optimism about U.S. growth prospects.

With no major bankruptcies last year, the overall sporting goods industry further stabilized in 2019, and many stocks were rewarded by investors.

Among retailers,  Hibbett Sports’ shares vaulted 96.1 percent last year after dropping 29.9 percent in 2018 and 45.3 percent in 2017. The sporting goods chain saw sales smartly recover, vaulting 10.3 percent in the third quarter, while its e-commerce business took off.

Dick’s Sporting Goods, which recently reported its strongest quarterly comps since 2013, surged 58.6 percent. Sportsman’s Warehouse, which benefits as Dick’s, Walmart and others shift away from the hunt category, jumped 83.3 percent.

Lululemon, which didn’t lose a step despite bringing in a new CEO, rose 90.5 percent in 2019 on top of a 54.7 percent increase in 2018. Comps at the yoga-themed retailer ran up 17 percent on a currency-neutral basis in the third quarter.

Among broader retailers, Target stood out with a 94 percent gain as both in-store and online initiatives appear to be clicking. Other retailers marking big stock gains in 2019 included Zumiez, Costco, Camping World, Walmart, and the three leading off-pricers—TJX Cos., Ross Stores and Burlington Stores.

Many department stores lost value in 2019 as the sector continued to face challenges. Foot Locker, which has seen its same-store sales arrive below Wall Street’s targets, gave back 26.7 percent in 2019.

Among vendors, Nike’s stock rose 36.6 percent to $101.31 after sitting in the $50s in the fall of 2017. Robust international growth, particularly in China, and a continuing recovery in North America, continued to help Nike exceed Wall Street expectations.

Shares of Skechers U.S.A. surged 88.7 percent in 2019 as international growth accelerated.

V.F. Corp. moved up 39.7 percent as sales momentum continued for its two largest brands, Vans and The North Face. Adidas AG added 56.0 percent after seeing a marginal gain in 2018. Crocs’ 61.2 percent gain last year came on top of a 105.5 percent gain in 2018. Some recovery in the golf market boosted Acushnet Holdings, up 54.2 percent and Callaway Golf, ahead 38.6 percent.

Yeti saw the strongest gain among vendors, skyrocketing 134.4 percent, to $34.78. The cooler brand more than recovered from a disappointing IPO in October 2018. Shares in the IPO priced $18, below its projected price range of $19 to $21, and the stock closed 2018 at $14.84.

Peloton Interactive Inc., the indoor cycling leader, was the only IPO in the space, pricing at $29 a share on September 26 for a valuation of $8.2 billion. The stock ended the year at $28.40.

On the downside among vendor stocks, American Outdoor Brands and Vista Outdoor both suffered stock declines amid a continued slump in the hunt category. Steep declines were also seen by Duluth Holdings, Dorel Industries and Nautilus.

Photo courtesy Hibbett Sports